2.1 Why Do People Give

Why Do People Give?

The major problems that nonprofits experience, such as employee dissatisfaction, non-ethical leadership and limited availability of resources, may be caused by the lack of funds available to nonprofits. Donations are vital to nonprofits to ensure that company leaders are not tempted to take illegal action to meet the payroll expense and purchase resources. A steady donation supply also eases tensions within nonprofit organizations, which experience intense competition for resources and reduced government spending in an uncertain economy. This section on fundraising techniques will explore the concepts of giving and receiving funds in the context of nonprofit industry. It will attempt to discover the way in which a successful fundraising campaign can be accomplished.

Table 2.1

Source: Mixer (1993)

The process of giving and receiving funds involves social relationships between the two parties. The givers have needs and desires, or “motivations” (Mixer, 1993, 9), while the receivers have the obvious need for the funds. The flow of funds, motivations and rewards is illustrated in the “social exchange model” (Mixer, 1993, 9)1 .

The first arrow between agency and prospect represents a nonprofit organization’s solicitation for funds. The organization will present a list of needs and services along with a request for funds from the prospect. The methods with which this can be done are unlimited. The prospect may then respond with a donation of time and/or money, which is shown by the second arrow. To finalize the exchange, the agency provides the prospect with some form of satisfaction. This can be done via a thank-you note, recognition in the organization’s newsletter, acknowledgement at some public event, etc. The return the agency gives to the prospect results in intangible psychological and social satisfaction that relates to the prospect’s internal motivation for giving the gift.

The social exchange model has three constraints (Mixer, 1993). First, the social exchange must be non-contractual. This means that there is no obligation for the receiver to return any specific assets, tangible or intangible, in exchange for the gift. The second constraint is that there is no time limit. It is simply assumed that a return for the donation will be given in the indefinite future; the social custom is that the response will be reasonably prompt. The last constraint states there is a sufficient level of trust between the parties entering the social exchange. This trust is assured in the marketplace by the Consumer’s Bill of Rights. The donors trust the gift will be put to good use and that the organization will remain faithful to their stated purpose. The agency trusts the donors will have a continuing concern for their organization that will manifest in future donations.

For a nonprofit organization to survive, it must totally understand the process of giving and receiving funds. “People who give to nonprofits represent a market that can be identified, understood and approached” (Mixer, 1993, 4). Donors have two types of motivations, internal and external. Internal motivations develop in situations where “something is desired, satisfies a need, relieves tension or feels good” whereas external motivations come from “persons, events or conditions in the environment” (Mixer, 1993, 13). Donors’ internal motivations must be appealed to or triggered by some external motivation. Nonprofits must seek out these donors and learn the motivations behind their behavior in order to fully exploit the philanthropic culture for the organization’s benefit.

There are three dimensions of internal motivation: personal factors, social factors and negative factors (Mixer, 1993). Personal factors include notions of achievement, meaning, immortality and survival. Donors expect that something worthwhile and specific will be achieved with their funds. They often place precise restrictions on their gifts in order to fulfill their desire to achieve an exact goal. People sometimes long for a sense of meaning in their lives. Donors attempt to find meaning by affiliating with a cause that they feel is more important then themselves; the most common cause is world peace. Many people deal with their impending mortality by establishing endowments and foundations that will outlive them. The cause for the desire for immortality can range from selfishness to family honor to religious beliefs. “Survival is our most basic drive” (Mixer, 1993, 17). Donors demonstrate their desire to survive by giving to causes that deter crime, reduce pollution and prevent other living hazards.

Social relationships exemplify our dependency on others. Social internal motivations, such as status, power and interdependence can be used to strengthen the ties donors have with other people and to satisfy the personal factors already discussed. Status helps individuals clarify their societal position in relation to others. Symbols of status that a donor may receive are titles within the organization and a sense of authority. Power is often sought after in social situations. For donors, the power to influence the direction of the organization with their funds is often incentive enough for giving. A sense of interdependence is also sought after, especially when personal relationships break down. Donors curb their own feelings of loneliness by giving to organizations that work to strengthen social relationships, such as support groups and welfare agencies.

Internal motivations are not necessarily positive. Negative motivations, such as frustration, fear and anxiety can be very powerful as well. Frustration comes from an inability to fulfill other personal and social desires. For example, a donor who is unable to achieve status or recognition can overcome their frustration of being overlooked by making a large donation. The fear and anxiety that people experience when dealing with unknown situations, such as the cause of cancer, can be the source of much tension and unhappiness. Donors alleviate this fear by donating to organizations, such as the American Cancer Society. The donor transfers the responsibility of finding of cure, along with a monetary gift to a research organization to attempt to control the outcome of such unknown situations.

There are three types of external motivations: rewards, stimulations and situations (Mixer, 1993). These external factors elicit responses to internal motivations. Rewards can take the form of recognition, personal rewards and social rewards. Rewards of recognition and status often trigger donors into action, as already mentioned. Donors also appreciate the personal rewards they receive from giving, such as thank-you notes, phone calls, etc. Social rewards, such as an increased sense of community cohesiveness, are less tangible but equally motivating.

There are several ways agencies can stimulate prospective donors to decide to make a donation. Nonprofit organizations can first and foremost make a personal request for funds. A recent survey done by INDEPENDENT SECTOR (2001), an alliance of nonprofit agencies in the United States, demonstrated that although 29% of Americans volunteer time and money, regardless of whether they have been asked; the figure increases to 71% when a personal request has been made. Tax deductions are also powerful stimulators. The same INDEPENDENT SECTOR (2001) survey reported that all income level households that claim tax deductions donated at least 40% more in funds and time than households that do not claim deductions.

Personal situations can influence the amount of giving a donor will perform. Individuals that are personally involved in any type of organizational activity are among the most generous givers (Mixer, 1993). Peer pressure is another situational motivation. When people see friends and/or family donating funds and time to nonprofit agencies, they typically follow suit to maintain their status in the group. Tradition and historic practices can also motivate donors; this is especially prevalent among religious institutions. INDEPENDENT SECTOR (2001) reported that households that traditionally attend church services donated approximately $2,151 to a variety of nonprofit organizations in 2001. Households without this tradition donated only an average of $867 in 2001.

While it is important to understand the motivations behind those Americans who donate to nonprofit organizations, 28% (Mixer, 1993) of the population does not donate any funds or time. There are personal characteristics that are not inductive to the donating culture, such as having other interests or higher priorities. Personal finances can also be a determining factor for an individual’s desire to donate. Some people choose not to donate simply because of an agency’s communication problems. If information about the nonprofit agency is lacking, or if the information available is misleading, vague or portrays poor organizational behavior, prospective donors may choose to not donate.

Finally, past negative experiences with solicitors from nonprofit agencies may prevent an individual from donating to that organization. “No more critical time exists than that during the process of asking the prospect” (Mixer, 1993, 33). Asking too often or for too much can result in negative reactions in donors. The use of paid fundraisers raises questions about the use of the individual’s potential donation. Asking for a second donation too soon after the first can also bias donors against an organization.

1 This section is based on Joseph Mixer’s (1993) “social exchange model.”